Dividend ETFs are ETFs that invest in companies that pay dividends on a regular basis. These ETFs are ideal for investors who want to receive a constant and regular distribution of dividends. However, since there are many different providers with different products, you first need to know what to look for when choosing the right dividend ETF.
One of the best-known ETF preachers is Gerd Kommer, as everyone knows. We also learned about ETFs from Gerd Kommer at the time. His selection criteria are, above all, that they must be listed in a regulated market, have a fund volume of at least 25 to 50 million USD, have a liquidity of more than 200,000 US dollars per day and have an average trading volatility of less than 15% per year. The brand - whether it is iShares or Vanguard - is irrelevant here as these have a special asset status and thus the investment assets are separate from the assets of the fund company. In addition to this, there are criteria such as costs, savings plan capability and the width of the bid-ask spread. It is important, however, that the mode of use of the current income must be distributive.
The most popular dividend ETFs among retail investors are the iShares STOXX Global Select Dividend 100 UCITS ETF (DE), the SPDR S&P Dividend Aristocrats UCITS ETF and the Vanguard FTSE All-World Hight Dividend Yield UCITS ETF.
| Name | ISIN | DIVIDENDS 2022 | ø DIV. RENDITE | VOLATILITY | TER |
|---|---|---|---|---|---|
| SPDR S&P Dividend Aristocrats UCITS ETF | IE00B9CQXS71 | 1,29EUR | 4,35% | 13,18% | 0,45% |
| iShares STOXX Global Select Dividend 100 UCITS ETF (DE) | DE000A0F5UH1 | 1,35EUR | 4,68% | 11,49% | 0,46% |
| Vanguard FTSE All-World High Dividend Yield UCITS ETF Distributing | IE00B8GKDB10 | 2,14EUR | 3,99% | 12,88% | 0,29% |
All these securities are of course eligible for savings plans with various broker banks. Another advantage of dividend ETFs is of course the low management costs, which are around 0.4% because they do not have to be actively managed.
How would the performance and dividends have developed if I had set up a savings plan on iShares STOXX Global Select Dividend 100 UCITS ETF 10 years ago? In this example, we assume that we invest €100 per month and arrive at the following result:
| Year | Invested | Portfolio value at the end of the year | Dividend | Div. return |
|---|---|---|---|---|
| 2013 | 1200,00€ | 1208,28€ | 39,17€ | 3,26% |
| 2014 | 2400,00€ | 2670,11€ | 70,85€ | 2,95% |
| 2015 | 3600,00€ | 3686,86€ | 149,22€ | 4,15% |
| 2016 | 4800,00€ | 5297,49€ | 181,10€ | 3,77% |
| 2017 | 6000,00€ | 6501,16€ | 330,67€ | 5,51% |
| 2018 | 7200,00€ | 7604,32€ | 260,93€ | 3,62% |
| 2019 | 8400,00€ | 9383,86€ | 358,73€ | 4,27% |
| 2020 | 9600,00€ | 8347,82€ | 321,44€ | 3,35% |
| 2021 | 10800,00€ | 12114,36€ | 435,09€ | 4,03% |
| 2022 | 12000,00€ | 12348,96€ | 604,60€ | 5,04% |
So if you want to make capital gains, you should not invest in dividend ETFs. However, the dividend yield has always been very decent. For a passive income, this is a quite solid and low-risk investment. In total, €12,000 was saved over the 10 years and in the end you would have a fortune of €15,100 (including capital gains and dividends). That is a total return of about 25%.
An investment in individual stocks also entails certain risks. The question is, however, is it worth taking this risk? In the following example, we set up a savings plan for the Coca-Cola share. We save €100 per month and the time frame is again the last 10 years.
| Year | Invested | Portfolio value at the end of the year | Dividend | Div. return |
|---|---|---|---|---|
| 2013 | 1200,00€ | 1171,87€ | 15,03€ | 1,25% |
| 2014 | 2400,00€ | 2592,19€ | 52,05€ | 2,17% |
| 2015 | 3600,00€ | 3606,04€ | 93,47€ | 2,60% |
| 2016 | 4800,00€ | 4966,62€ | 138,95€ | 2,90% |
| 2017 | 6000,00€ | 6530,84€ | 187,17€ | 3,12% |
| 2018 | 7200,00€ | 7936,71€ | 238,55€ | 3,31% |
| 2019 | 8400,00€ | 10671,37€ | 288,79€ | 3,44% |
| 2020 | 9600,00€ | 10866,33€ | 334,26€ | 3,48% |
| 2021 | 10800,00€ | 12745,06€ | 382,40€ | 3,54% |
| 2022 | 12000,00 | 14784,84€ | 433,23€ | 3,61% |
In fact, the total return here is 41% instead of the 25% for an ETF. The difference is not small, but the risk is also significantly higher than with an ETF.
If you want to sleep peacefully and generate a passive income at the same time, dividend ETFs are a very good choice. The risk is much lower than with an individual share and the dividend yield has always been very respectable on average.
If you would like to discover more dividend stocks or ETFs, you are welcome to use our Dividend App. myDividends24 use. Here you get access to over 3,000 stocks and ETFs and can even create a portfolio and add the stocks you want. Here you can find more details for this. Download now free of charge and test it for 7 days.
Each company should be carefully analysed before making an investment decision because the dividend yield alone should not be an impulse for an investment. Of course, you can minimise the risk with ETFs, but you should still be aware that you are an investor and should know which companies you invest in and why. Because wrong decisions can lead to a total loss. So if you are not sure, contact us and we can provide you with a fundamental analysis of the respective company and list the strengths and weaknesses of the company.
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Inhalt Puh, Börse ist doch nicht „e wie einfach“ Das KGV, KBV, KUV und wie die ganzen Kennzahlen heißen, ist für jeden Börsenneuling
Inhalt ist eine Anlagestrategie, bei der Anleger Aktien von Unternehmen kaufen, die regelmäßige Dividendenzahlungen ausschütten. Das Ziel dieser Strategie ist es, ein regelmäßiges
Inhalt Viele Anleger fragen sich ständig, warum Aktien fallen, nachdem die Ergebnisberichte der Unternehmen veröffentlicht wurden, besonders, wenn die Entwicklung laut des Berichts
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